The 1927 easy money policy was initiated by the New York Reserve bank to encourage domestic business and strengthen European exchanges. The policy was successful in achieving these objectives, but it gave a dangerous impetus to stock market speculation.
The difficulties between the Federal Reserve Board and Benjamin Strong, especially between Strong and Adolph Miller, continued in 1927. Strong was not well and at the December 4 board meeting had been granted a leave of absence from the FRBNY until April 1, 1927. But if he thought that tensions between Washington and the FRBNY would abate during his absence he was mistaken. Miller continued his efforts to effect the sale of Government securities as a way of reducing bank reserves, and while some shared his thinking on the matter, he still lacked the support to effect a change in the system's holdings.2 In addition and more seriously, he continued his efforts to strengthen the board's control over the system.
This chapter examines the continuing struggle for domination of the Federal Reserve System. It focuses in turn on attempts to centralize control in Wash-____________________